Etsy is a popular online marketplace for selling handmade, vintage, and craft supplies. Its low barriers to entry and built-in marketplace make it easy for crafters and artists to turn their creations into a business. However, Etsy does charge various fees that subtract from your total sales. As an Etsy seller, it’s important to understand Etsy’s fee structure so you can calculate your true profits.
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Overview of Etsy Fees
Etsy charges three main types of fees:
- Listing fees – For each item you list, Etsy charges $0.20. This fee is incurred whether the item sells or not.
- Transaction fees – When an item sells, Etsy charges 5% of the total sale price including shipping.
- Payment processing fees – For each order paid online, Etsy charges 3% + $0.25 to process the payment. This is on top of any payment processing fees from third-parties.
In addition to the fees above, Etsy also charges extra fees for features like promoted listings, custom branding, and off-site ads. There are no monthly subscription fees just to maintain a shop.
Let’s break down each fee in more detail:
Etsy Listing Fees
Every time you publish a new listing or re-list an old one, Etsy charges $0.20. It doesn’t matter if you list 1 or 10,000 items per month, the fee remains $0.20 per listing.
This means the more items you list, the more you’ll pay in listing fees. Listing fees add up over time, especially if you have to renew listings frequently.
However, the $0.20 listing fee is relatively low compared to other sites. eBay, for example, charges $0.30 to list most items.
Listing fees incentivize sellers to only post items they are reasonably confident will sell. Renewing unsold listings comes at a constant cost.
Etsy Transaction Fees
This is the biggest fee Etsy sellers encounter – the dreaded 5% transaction fee. On every sale, Etsy takes 5% of the total order value including shipping.
- Item price: $10
- Shipping price: $4
- Total sale value: $10 + $4 = $14
- Etsy transaction fee: 5% of $14 = $0.70
So if your item sold for $10 with $4 shipping, you would pay Etsy $0.70 in transaction fees. This adds up to a significant cut, especially on expensive items.
The 5% transaction fee applies to both digital and physical goods. It also applies to shops set up with Etsy Payments or a third-party processor like PayPal.
Etsy’s 5% fee is on the higher side compared to competitors:
- eBay – 10% fee up to $750, then drops to 5%
- Amazon Handmade – 12-15% fee depending on category
- Shopify – 2-3% fee if using Shopify Payments
However, sellers ultimately pay the 5% Etsy fee in exchange for access to the marketplace’s large buyer base.
Etsy Payment Processing Fees
When a buyer pays for their order via credit card, Etsy processes the payment on your behalf and charges a fee for this service.
If you use Etsy Payments, the fee is 3% + $0.25 per online order. For a $15 order, your payment processing fee would be $0.60.
The 3% is comparable to other processors like Stripe or PayPal. The $0.25 is an extra fee Etsy tacks on.
You can use a third-party processor like PayPal instead, but you’ll still incur Etsy’s transaction fee. PayPal would just replace the 3% + $0.25 charge with its own fee. This route may be cheaper for higher priced items.
Processing fees impact digital sellers too if their items aren’t free. For digital products, PayPal tends to be more cost effective than Etsy Payments.
Additional Etsy Fees
Aside from the three main fees above, Etsy charges for optional features:
- Promoted Listings – Pay per-click for ads to promote your products in search results. Etsy charges between $0.15 to $0.30 per click.
- Offsite Ads – 15% of the total order value if an order came via Google, Facebook, Instagram, Pinterest, etc. Can only be turned off after making $10,000 in sales.
- Pattern – Sell unlimited one-of-a-kind printable files. Costs $15 per month + 5% transaction fees.
- Plus – For access to priority support and custom shop branding. $10 per month.
- Shipping Labels – Discounted USPS rates but no other shipping carriers. Cost varies by carrier and package weight.
The extra fees above are optional for enhancing your shop. But listing, transaction, and payment processing fees apply to every shop by default.
Estimating Your True Etsy Profits
To determine your profit margin, you’ll need to deduct all applicable Etsy fees from the listing price. Let’s break down an example:
- Handmade necklace listed for $20
- $4 shipping charge to buyer
- Sold 1 necklace in the month
- Total sales = $24
Etsy fees on the sale:
- Listing fee: $0.20
- Transaction fee: 5% of $24 = $1.20
- Payment processing fee (Etsy Payments): 3% of $24 = $0.72 + $0.25 = $0.97
- Total fees = $0.20 + $1.20 + $0.97 = $2.37
To calculate your profit:
- Total sales: $24
- Total Etsy fees: $2.37
- **Profit = Total sales – Etsy fees
- Profit = $24 – $2.37 = $21.63**
For one $20 necklace sold, your true profit is $21.63 after Etsy takes its share of fees.
Now multiply that by larger volumes – if you sold 50 necklaces at $20 each, you would pay Etsy over $100 in fees that month.
Tips for Minimizing Etsy Fees
While you can’t completely avoid Etsy fees, here are some tips to reduce the bite:
- Set higher prices to account for fees – aim for a 35-50% profit margin.
- Reduce listing renewals by improving SEO and photography.
- Consider offsite payment processing if selling high-ticket items.
- Analyze promoted ads ROI and adjust bids for profitability.
- Maintain excellent customer service to reduce refunds/cases.
Understanding Etsy’s fee structure is key for building a profitable Etsy shop. With planning and optimization, you can manage the fees and achieve your income goals.